INDIANAPOLIS, Feb. 2, 2011 (GLOBE NEWSWIRE) -- Brightpoint, Inc. (Nasdaq:CELL), a global leader in providing supply chain solutions to the wireless industry, today announced its financial results for the fourth quarter ended December 31, 2010. Unless otherwise noted, amounts pertain to the fourth quarter of 2010.
FOR THE FOURTH QUARTER OF 2010:
Revenue was $1.1 billion for the fourth quarter of 2010, an increase of 24% compared to the fourth quarter of 2009 and an increase of 26% compared to the third quarter of 2010.
Wireless devices handled were 29.1 million for the fourth quarter of 2010, which was a record amount of units handled in a quarter for Brightpoint. This represents an increase of 21% compared to the fourth quarter of 2009 and an increase of 17% compared to the third quarter of 2010. The increase in wireless devices handled compared to the fourth quarter of 2009 and the third quarter of 2010 was driven by an increase in wireless devices handled through logistic services. Wireless devices handled through logistic services were 23.8 million for the fourth quarter of 2010, which is also a quarterly record for Brightpoint.
Income from continuing operations was $15.4 million or $0.22 per diluted share for the fourth quarter of 2010 compared to $21.4 million or $0.27 per diluted share for the fourth quarter of 2009 and $11.4 million or $0.16 per diluted share for the third quarter of 2010. Income from continuing operations for the fourth quarter of 2009 included a non-taxable gain of $7.7 million or $0.10 per diluted share on the settlement of an indemnification claim with NC Telecom Holding A/S relating to our purchase of Dangaard Telecom A/S.
Adjusted income from continuing operations (non-GAAP) was $24.0 million or $0.34 per diluted share for the fourth quarter of 2010 compared to $17.8 million or $0.22 per diluted share for the fourth quarter of 2009 and $16.4 million or $0.23 per diluted share for the third quarter of 2010.
Adjusted income from continuing operations (non-GAAP) of $0.34 per diluted share for the fourth quarter of 2010 excludes the following items:
- $3.8 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
- $2.9 million (pre-tax) of acquisition expenses related to the acquisition of Touchstone Wireless Repair and Logistics, L.P. (Touchstone).
- $2.4 million (pre-tax) of non-cash stock based compensation expense.
- $3.5 million (pre-tax) restructuring charge which primarily consists of lease termination charges and severance charges in connection with continued global entity consolidation and rationalization.
- $0.2 million (pre-tax) charge related to a contingency that was assumed with the purchase of Dangaard Telecom in July 2007.
- $4.0 million tax benefit related to the excluded expenses described above.
- $0.1 million of discrete tax benefit.
Gross margin was 8.5% for the fourth quarter of 2010 compared to 9.0% for the fourth quarter of 2009 and 8.6% for the third quarter of 2010.
SG&A expense was $62.3 million for the fourth quarter of 2010 compared to $55.1 million for the fourth quarter of 2009 and $57.4 million for the third quarter of 2010. Foreign currency fluctuations negatively impacted SG&A expense by approximately $2.0 million compared to the third quarter of 2010. SG&A expenses for the fourth quarter of 2010 included approximately $1.0 million of asset impairment charge as well as increases in equity compensation, travel, recruiting, training, and charitable contribution expenses compared to the same period in prior year.
Total debt was $90.4 million at December 31, 2010, compared to $112.3 million at September 30, 2010 and $97.0 million at December 31, 2009. Total liquidity (unrestricted cash and unused borrowing availability) was $446.7 million at December 31, 2010 compared to $355.5 million at September 30, 2010 and $426.2 million at December 31, 2009. Average daily debt outstanding for the fourth quarter of 2010 was $192.8 million compared to average daily debt outstanding of $220.0 million for the third quarter of 2010 and $167.7 million for the fourth quarter of 2009. Average daily debt for January 2011 was $289.9 million.
Total debt and liquidity at December 31, 2010 and average daily debt for the fourth quarter of 2010 includes the impact of the acquisition of Touchstone for a net purchase price of $75.7 million as well as the purchase of a Center of Excellence facility in the United States for a purchase price of $18.4 million plus closing costs. Both of these transactions closed in December 2010 and were financed with available funds from our amended Senior Revolving Credit Facility.
Cash provided by operating activities was $160.4 million for the year ended December 31, 2010 compared to $163.8 million for the same period in the prior year. Cash provided by operating activities was $137.1 million for the three months ended December 31, 2010 compared to cash provided by operating activities of $51.1 million for the three months ended December 31, 2009 and cash provided by operating activities of $42.1 million for the three months ended September 30, 2010.
The cash conversion cycle was negative 2 days for the fourth quarter of 2010, compared to 6 days for the fourth quarter of 2009 and 9 days for the third quarter of 2010. During the fourth quarter, invoicing issues from one of our key global vendors caused an unusually high accounts payable balance as well as high days payable outstanding. We do not believe this negative cash conversion cycle will continue in future periods. In 2010, the average quarterly cash conversion cycle was 8 days.
EBITDA was $85.8 million for the year ended December 31, 2010 compared to $68.2 million for the same period in the prior year. EBITDA was $30.6 million for the fourth quarter of 2010 compared to $31.9 million for the fourth quarter of 2009 and $21.3 million for the third quarter of 2010. EBITDA for the three months ended December 31, 2009 included a non-cash, non-taxable gain of $7.7 million for the settlement of an indemnification claim with NC Telecom Holding A/S relating to our purchase of Dangaard Telecom A/S.
"I am very pleased with our fourth quarter and full year 2010 operating results, which reflect our continued focus on execution and discipline in managing our business," said Robert J. Laikin, Chairman of the Board and Chief Executive Officer of Brightpoint, Inc. "Our comprehensive solutions offerings enabled us to handle approximately 99 million wireless devices in 2010 which clearly demonstrates our global leadership position. Our recent acquisition of Touchstone Wireless provides us with new service offerings, which enhances our broad array of wireless supply chain solutions. We will continue to invest in new services that are critical to support the proliferation of smartphones and tablets in the global wireless industry. We expect the global wireless handset market to grow by approximately 10% in 2011."
"I am pleased we were able to deliver strong financial results for the fourth quarter and throughout 2010," said Tony Boor, Brightpoint's Chief Financial Officer and Treasurer. "Distribution average selling price was over $190 for the fourth quarter of 2010, which is an increase of over 22% compared to the fourth quarter of 2009 and reflects our growing share of smartphones sold. Through the team's diligent execution, we were able to generate $160 million of operating cash flow for the year. This improvement in liquidity allowed us to pay down debt and to capitalize on strategic opportunities, including the purchase of Touchstone Wireless, an additional Center of Excellence facility in North America and the repurchase of over 12 million shares of Brightpoint common stock."
ACQUISITION OF TOUCHSTONE WIRELESS
Brightpoint acquired Touchstone on December 23, 2010 for $75.7 million and incurred $2.9 million of acquisition expenses. Results of operations related to the acquisition are included in our consolidated results of operations beginning on December 24, 2010. The Company is currently in the process of integrating the Touchstone operations. The following balance sheet sets forth the preliminary valuation of major assets acquired and liabilities assumed in connection with the Touchstone transaction (in thousands):
FISCAL YEAR 2011 EXPECTATIONS
The Company currently anticipates handling between 111 million and 114 million wireless devices in 2011. This range represents an increase of 12% to 14% compared to wireless devices handled by the Company in 2010. The Company's current expectations for wireless devices handled do not include devices handled by Touchstone, which primarily handles used devices for repair, remanufacture or responsible disposition. The Company's current estimate of the expected growth in global sell-in for the wireless device industry in 2011 is approximately 10% when compared to 2010.
We currently expect income from continuing operations (GAAP) of $0.58 to $0.73 per diluted share and adjusted income from continuing operations (non-GAAP) of $0.90 to $1.05 per diluted share. Adjusted earnings per share (non-GAAP) excludes $0.32 per diluted share of stock based compensation, amortization of acquired intangible assets and restructuring charge (net of tax). Adjusted earnings per share (non-GAAP) assumes 72.7 million of diluted weighted average shares outstanding which includes 2.9 million shares of common stock related to stock based compensation that are presumed to be repurchased under the U.S. GAAP treasury stock method. Please see the supplemental information attached for the reconciliation of the range of estimated GAAP diluted earnings per share to estimated as-adjusted (non-GAAP) diluted earnings per share.
Please see the attached Schedules and the Investors section at the Brightpoint website at for an explanation and reconciled presentation of the results for the quarter ended December 31, 2010 prepared in accordance with U.S. GAAP and on an as adjusted non-GAAP basis. The explanation includes the reasons why management believes such non-GAAP measures are useful both to management and investors. Any financial measure other than those prepared in accordance with U.S. GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. In addition, please see the attached Supplemental Information for a reconciliation of EBITDA.
The consolidated statements of operations for all periods presented reflect the reclassification of the results of operations of our Italy and France businesses to discontinued operations in accordance with U.S. GAAP based on our decision to exit the Italy business in the first quarter of 2010 and the France business in the third quarter of 2009. Please see the Investors section at the Brightpoint website at for quarterly statements of operations for all periods that have been reclassified.
(1) Income from continuing operations attributable to common shareholders for the three months ended December 31, 2009 includes a non-taxable gain of $7.7 million, or $0.10 per diluted share, on the settlement of an indemnification claim with NC Telecom Holding A/S relating to our purchase of Dangaard Telecom A/S.
Conference Call Information
On Thursday, February 3, 2011, at approximately 8:00 a.m. EST, Brightpoint will conduct a conference call to review the Company's operations and financial performance and will answer participants' questions. For those who prefer to join the conference call telephonically, use the following information and dial in several minutes prior to the start of the call:
U.S. toll-free dial-in number: 888-710-4015
International dial-in number: 913-312-1521
The presentation of slides can be accessed through the Investors section of the Company's website at . Following the live presentation, an archive of the webcast will be available through the Investors section of the Company's website at for approximately one year.
About Brightpoint, Inc.
Brightpoint, Inc. (Nasdaq:CELL) is a global leader in providing end-to-end supply chain solutions to leading stakeholders in the wireless industry. In 2010, Brightpoint handled approximately 99 million wireless devices globally. Brightpoint's innovative services include distribution channel management, procurement, inventory management, repair services and reverse logistics, software loading, kitting and customized packaging, fulfillment, product customization, eBusiness solutions, and other outsourced services that integrate seamlessly with its customers. Brightpoint's effective and efficient platform allows its customers to benefit from quickly deployed, flexible, and cost effective solutions. The Company has approximately 4,000 permanent employees as well as a significant number of temporary employees in more than 25 countries. In 2010, Brightpoint generated revenue of $3.6 billion. Brightpoint provides distribution and customized services to over 25,000 B2B customers worldwide. Additional information about Brightpoint can be found on its website at , or by calling its toll-free Information and Investor Relations line at 877-IIR-CELL (877-447-2355).
Forward Looking and Cautionary Statements
Certain information in this presentation may contain forward-looking statements regarding future events or the future performance of the Company, including estimates for wireless devices handled and income from continuing operations (non-GAAP) per diluted share for 2011 that are subject to change. These statements are only predictions and actual events or results may differ materially. Please refer to the documents the Company files, from time to time, with the Securities and Exchange Commission; specifically, the Company's most recent Form 10-K and Form 10-Q and the cautionary statements and risk factors contained therein. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in or implied by these forward-looking statements. These risk factors include, without limitation, uncertainties relating to customer plans and commitments, including, without limitation (i) fluctuations in regional demand patterns and economic factors could harm our operations; (ii) we buy a significant amount of our products from a limited number of suppliers, and they may not provide us with competitive products at reasonable prices when we need them in the future; (iii) our dependence on our computer and communications systems; (iv) uncertainty regarding future volatility in our Common Stock price; (v) our ability to expand and implement our future growth strategy, including acquisitions; (vi) protecting our proprietary information; (vii) rapid technological changes in the wireless industry could render our services or the products we handle obsolete or less marketable; (viii) intense industry competition; (ix) the loss or reduction in orders from principal customers or a reduction in the prices we are able to charge these customers could cause our revenues to decline and impair our cash flows; (x) our ability to retain existing logistic services customers at acceptable returns upon expiration or termination of existing agreements; (xi) our business could be harmed by consolidation of mobile operators; (xii) we make significant investments in the technology used in our business and rely on that technology to function effectively without interruptions; (xiii) our future operating results will depend on our ability to maintain volumes and margins; (xiv) the effect of natural disasters, epidemics, hostilities or terrorist attacks on our operations;(xv) uncertainty regarding whether wireless equipment manufacturers and wireless network operators will continue to outsource aspects of their business to us;(xvi) the current economic downturn could cause a severe disruption in our operations;(xvii) our implementation of European Centers of Excellence may not be successful; (xviii) our ability to continue to enter into relationships and financing that may provide us with minimal returns or losses on our investments; (xix) collections of our accounts receivable; (xx) our ability to manage and sustain future growth at our historical or current rates; (xxi) our ability to attract and retain qualified management and other personnel and the cost of complying with labor agreements and high rate of personnel turnover; (xxii) our reliance upon third parties to manufacture products which we distribute and reliance upon their quality control procedures; (xxiii) our debt facilities could prevent us from borrowing additional funds, if needed; (xxiv) our reliance on suppliers to provide trade credit facilities to adequately fund our on-going operations and product purchases; (xxv) a significant percentage of our revenues are generated outside of the United States in countries that may have volatile currencies or other risks;(xxvi) the impact that seasonality may have on our business and results; (xxvii) potential dilution to existing shareholders from the issuance of securities under our long-term incentive plans; and (xxviii) the existence of anti-takeover measures. Because of the aforementioned uncertainties affecting our future operating results, past performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate future results or trends. The words "believe," "expect," "anticipate," "estimate" "intend," "likely", "will", "should" and "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which speak only as of the date that such statement was made. We undertake no obligation to update any forward-looking statement.
(1) Adjusted income from continuing operations (non-GAAP) for the fourth quarter of 2010 excludes the following items:
- $3.8 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
- $2.9 million (pre-tax) of acquisition expenses related to the purchase of Touchstone Wireless Repair and Logistics, L.P.
- $2.4 million (pre-tax) of non-cash stock based compensation expense.
- $3.5 million (pre-tax) of restructuring charges which primarily consists of lease termination charges and severance charges in connection with continued global entity consolidation and rationalization.
- $0.2 million (pre-tax) charge related to a contingency that was assumed with the purchase of Dangaard Telecom in July 2007.
- $4.0 million tax benefit related to the excluded expenses described above.
- $0.1 million of net discrete tax benefit. $3.8 million of tax benefit is related to the reversal of valuation allowances on deferred tax assets that are expected to be utilized as a result of restructuring the legal ownership of certain European subsidiaries. This benefit is offset by $2.3 million tax expense related to valuation allowances on deferred tax assets resulting from previous net operating losses in Belgium that are no longer expected to be utilized and $1.4 million of tax expense related to valuation allowances on foreign tax credits that are no longer expected to be utilized in the U.S.
(2) Adjusted income from continuing operations (non-GAAP) for the fourth quarter of 2009 excludes the following items:
- $4.0 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
- $1.5 million (pre-tax) of non-cash stock based compensation expense.
- $2.7 million (pre-tax) of restructuring charges in connection with our previously announced 2009 Spending and Debt Reduction Plan.
- $2.5 million tax benefit of the excluded expenses described above.
- $7.7 million non-cash, non-taxable gain on the settlement of an indemnification with NC Telecom Holding A/S.
- $1.6 million of net discrete tax benefit which is comprised of a $3.2 million benefit for the reversal of a valuation allowance on certain tax assets that are expected to be utilized in the U.S., partially offset by $1.6 million of income tax expense related to valuation allowances on deferred tax assets resulting from previous net operating losses in Colombia and Spain that are no longer expected to be utilized.
(3) Adjusted income from continuing operations (non-GAAP) for the year ended December 31, 2010 excludes the following items:
- $14.8 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
- $10.3 million (pre-tax) of non-cash stock based compensation expense.
- $2.9 million (pre-tax) of acquisition expenses related to the purchase of Touchstone Wireless Repair and Logistics, L.P.
- $6.2 million (pre-tax) of restructuring charges which primarily consists of lease termination charges and severance charges in connection with continued global entity consolidation and rationalization.
- $0.9 million (pre-tax) of costs related to the settlement of a legal dispute that arose in 2006 with the landlord of the former headquarters of Dangaard Telecom in Denmark; Dangaard Telecom was acquired by the Company in July 2007.
- $0.2 million (pre-tax) charge related to a contingency that was assumed with the purchase of Dangaard Telecom in July 2007.
- $10.5 million tax benefit of the excluded expenses described above.
- $0.1 million of net discrete tax expense. $3.1 million of expense is related to valuation allowances on deferred tax assets resulting from previous net operating losses in Colombia, Denmark, and Belgium that are no longer expected to be utilized and $1.4 million of expense is related to valuation allowances on foreign tax credits that are no longer expected to be utilized in the U.S. This tax expense is offset by $3.8 million of tax benefit related to the reversal of valuation allowances on deferred tax assets that are expected to be utilized as a result of restructuring the legal ownership of certain European subsidiaries and $0.6 million of tax benefit related to the reversal of valuation allowance on deferred tax assets that are expected to be utilized in Denmark.
(4) Adjusted income from continuing operations (non-GAAP) for the year ended December 31, 2009 excludes the following items:
- $15.5 million (pre-tax) of non-cash amortization expense related to acquired intangible assets.
- $1.5 million (pre-tax) impairment charge for our Latin America operation's finite-lived intangible assets. The asset was recorded in connection with the acquisition of certain assets of CellStar in 2007. In the third quarter of 2009, our Latin America operation lost a significant product distribution business, and we determined that the carrying value of the asset was not recoverable.
- $6.4 million (pre-tax) of non-cash stock based compensation expense.
- $13.4 million (pre-tax) of restructuring charges in connection with our previously announced 2009 Spending and Debt Reduction Plan.
- $11.6 million tax benefit of the excluded expenses described above.
- $7.7 million non-cash, non-taxable gain on the settlement of an indemnification with NC Telecom Holding A/S.
- $11.4 million of net discrete tax benefit, which is comprised of a $16.3 million benefit for the reversal of a valuation allowance on certain tax assets that are expected to be utilized in the U.S. and the reversal of a reserve on an uncertain tax position in Germany that became more likely than not to be sustained. These benefits were partially offset by $4.9 million of income tax expense related to a valuation allowance on deferred tax assets resulting from previous net operating losses in Denmark, Colombia, and Spain that are no longer expected to be utilized.
(5) Weighted average common shares outstanding – diluted for the three months ended December 31, 2010 and 2009 includes the effect of 2.4 million (2010) and 1.5 million (2009) common shares outstanding that are presumed to be repurchased under the U.S. GAAP treasury stock method related to stock based compensation expense. Weighted average common shares outstanding – diluted for year ended December 31, 2010 and 2009 includes the effect of 2.4 million (2010) and 1.9 million (2009) common shares outstanding that are presumed to be repurchased under the U.S. GAAP treasury stock method related to stock based compensation expense.
CONTACT: Brightpoint, Inc. 877-IIR-CELL